TECH: It helps to have friends: Walmart heir played hand in Achates Motors' quest to revolutionize engine market

PAT MAIO - pmaio@nctimes.com

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*This article has been modified since its original posting.

In the hilly terrain of Sorrento Valley, there's a tiny
developmental-stage company working on an unconventional combustion
engine that could revolutionize how big trucking companies move
cargo, or improve the fuel efficiency of a hybrid car beyond the 50
miles-per-gallon benchmark.

Achates Power Inc., which got its start trying to improve the
flight time of the Pentagon's fleet of unmanned aerial vehicles
used for surveillance and taking out bad guys in turbulent parts of
the world, eventually saw the writing on the wall. Its end game is
to eventually license out its technology to truckmakers or
automakers in larger commercial markets ---- including China, India
and the U.S., to name a few.

Achates shifted its strategy to find a commercial application of
its engine because it saw a greater payoff down the road ----
especially with the state and federal regulatory push to lower
emissions, according to David M. Johnson, president and chief
executive of Achates Power.

One of the early believers in the company was John Walton, eldest
son of Sam Walton, the founder of the world's largest retail chain
Walmart Stores Inc.

He made an initial investment of $12 million in Achates to come up
with a better-performing engine. Walton said he had an altruistic
purpose to improve fuel efficiency.

Despite the Walmart hook, Johnson, who joined the company in August
2008, points out that a major possible first application of the
technology could be trucks, where he sees a greater need to lower
particulate and other emissions that foul the air.

Reminders of the Walton connection are everywhere in the Achates
offices. In the early days of the company's formation in 2004, he
regularly stopped by the offices along Sorrento Valley Boulevard to
check in on how things were going.

Johnson, 44, proudly displays a model sitting on his desk of an
18-wheeler with Walmart's name emblazoned on the side. Walmart has
more than 7,200 tractors, 53,000 trailers and an army of drivers
who log 800 million miles annually, according to Kory Lundberg, a
Walmart spokeswoman.

John Walton, a billionaire heir involved in many venture capital
investments, was interested in clean technology, including solar
power and hybrid trucks and alternative fuels. Today's Walmart
continues with this interest. The retailer has testbeds of
state-of-the-art trucks everywhere from Phoenix and Detroit to
Dallas and the Mojave Desert Air Quality Management District in
Victorville.

His 2004 seed investment of $12 million helped Achates develop a
quirky cylinder that has two pistons beating away from opposing
sides rather than the conventional one with a single piston. The
Germans in the 1930s were widely credited with coming up with the
original principles of the engine.

The key to the so-called "opposed-piston two-stroke engine" ----
which is at the core of Achates Power's technology ---- is that
there is no head at the top of the cylinder where air and fuel is
typically mixed, and the combustion pushes the single-stroke piston
up and down, thus powering the transmission of a vehicle.

In the piston under development at Achates, the air and fuel are
mixed through jets that shoot the ingredients into the space
between the two pistons that push together within a single
cylinder.

Three days before the first operational test of the engine, John
Walton died in an experimental ultra-light aircraft he had built
himself and was piloting when it crashed shortly after takeoff in
Jackson, Wyo., on June 27, 2005.

While Walton provided the initial bankroll, Achates is the
brainchild of a theoretical physicist, James Lemke, who had long
been interested in the principles of the "opposed-piston two-stroke
engine," and been involved in many business startups.

To date, Achates has raised $53 million from several venture
capital firms, including Walton's estate through the Madrone
Capital Partners, and InterWest Partners, Rockport Capital, Sequoia
Capital, Triangle Peak Partners.

The company is in talks for a third round of venture capital
funding, and could go public in two years or so. Johnson, who
regularly rides with his bulky 1988 Ross mountain bike on the
trails behind his offices with engineers at the complex, isn't
worried about the future. The mechanical engineer has more
milestones to meet, such as building engines with multiple
cylinders, lowering the emissions to beat all rivals, and even test
the engine in a Toyota Prius ---- considered one of the most
fuel-efficient cars on today's roads.

A series of powertrain and research and development executives and
engineers with many major auto and truck companies have paid the
company a visit, Johnson observed.

"Our list of potential partners is in the hundreds," he said.

Call staff writer Pat Maio at 760-740-3527.

Correction:
This article has been corrected toreflect that Achates Power Inc. is the name of the companydeveloping a new engine in Sorrento Valley. The company also saidthere are no specific plans to test the engine in a Prius, but itis a possibility in the future.